July30

Lumber Update – August 2020

By Paul Rogers

Another month forward in 2020 and another month of turbulent but booming sales in the lumber market. Building material supply centers have remained busy throughout the pandemic, and even though the general consensus was that sales would taper off after stay-at-home orders were lifted. It had an opposite effect as stimulus money, a growing confidence that the economy would rebound, and cancelled vacation plans propelled homeowners to continue to invest in their homes. All of the activity gave one heck of a boost to spending and put a mammoth dent on supply. Virtually every sector of the building materials supply chain (but most especially with pressure treated and decking) suffered with outages, extended lead times, and anguish over disappointed and frustrated customers who couldn’t get material fast enough. Few anticipated such a robust and swift rebound. The supply-end of the equation was punished by that fact as they had reeled back their inventories and commonly laid off employees in anticipation of a downturn in business. Trying to catch up proved a difficult, if not impossible, challenge because companies were forced to operate short-handed as many workers were reluctant to return from layoffs either due to Covid-19 concerns or because of childcare and family care issues. As the pace of business has gone from a gallop to a fast trot, the big question now is how long the surge of business will last and how the rest of the year will look. A volatile economy brought on by Covid-19, a pending presidential election, and social unrest are weighing heavily on moving us forward. To that effect, the housing market (which hit bottom in March upon the announcement of the pandemic) has struggled to climb back to first quarter 2020 levels but is making progress, and permits are showing strength. Construction seems to be going unabated so perhaps people’s constitution toward spending and investing is still intact and the bigger issue is being able to get to all that needs to get it done and meet demand as skilled labor is still the key deficit in our industry. As of print, lumber pricing is firm with ample demand and thinning supplies, and business overall remains good. As we progress through the third quarter of the year, we remain cautious but optimistic that construction will continue to show strength despite the strains directly related to the pandemic and economic turmoil. Based on this, we predict that pricing will be firm to up for the duration of the month.

There’s much to be said for planning ahead but, like we’ve recently seen with supply issues, the best laid plans are still subject to the forces of the market. Three months ago all the experts saw this pandemic as a show stopper and cut production and staff to staunch the expected losses. No one expected construction to keep going as it has, and while this is overall great news, it has brought its supply challenges with it. This too shall pass. We always look at a situation and ask ourselves “Will we even be thinking about this 6 weeks from now?” Today’s monumental concern is often a vague memory 6 weeks from now.

The key is simply to plan ahead and to communicate. Supply chains work out their issues. For now the best course is to anticipate your needs on items like PT Lumber and decking, get us your stock list and we will pull your order to make sure you have it when you need it. We have trucks rolling in every day and we have prioritized our regular customers. We have people calling from even the Boston area for PT lumber, but we are managing our supply and keeping it for our steady accounts. So while there is a shortage, we have a plan and we have one of the best reliable supply relationships in the industry.

One thing that we can count on is that this business is cyclical. It’s just a matter of timing for when the pendulum swings high or low. Throughout the uncertainty, we encourage you to keep open communication with our sales people regarding your needs in order to help manage and quell the volatility that we see during busy times and to also help stimulate business during the quiet times. As always, please be sure to contact your Shepley sales person for your projects and, on behalf of everyone at Shepley, thank you for your business!

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